Troubled insurance giant American International Group Inc. filed a lawsuit against the former head of its aircraft leasing business, Steven Udvar-Hazy, contending the Los Angeles billionaire stole company secrets, wooed away customers and pilfered business deals after he started a competing firm in 2010.
The New York insurance company and its Century City unit, International Lease Finance Corp., or ILFC, filed suit Tuesday in Los Angeles County Superior Court. The 33-page complaint listed the defendants as Udvar-Hazy, his current company, Air Lease Corp., and 30 employees who left ILFC to work with him.
AIG asserted in the lawsuit that the defendants collectively connected 16 flash drives to ILFC computers and downloaded nearly 13,000 ILFC files, which included price data concerning the value of aircraft fleets, past contracts, letters of intent and statements of work.
“This is a case about theft of a business,” the first sentence of the lawsuit said. AIG and ILFC said they were seeking to recover losses that could amount to “several hundreds of millions” of dollars.
Laura St. John, a spokeswoman for Air Lease, called the suit “baseless.”
“While AIG/ILFC wastes its time in court,” she said in a statement, “Air Lease — under the leadership of Steve Udvar-Hazy, one of the most influential figures in the aircraft leasing industry — will continue to focus on providing the best products and services for airlines worldwide.”
Udvar-Hazy, a 66-year-old Hungarian emigre, made a name for himself pioneering the business of buying planes and leasing them to airlines after co-founding ILFC nearly four decades ago.
He became one of the richest men in Los Angeles when he sold ILFC for $1.3 billion to AIG in 1990. Udvar-Hazy stayed on after the deal to run ILFC.
But the relationship soured after AIG needed a federal bailout in September 2008 to stay afloat, giving the government oversight of the company and its units, including ILFC.
After repeatedly trying and failing to buy back ILFC from AIG, Udvar-Hazy left the company in February 2010 and quickly formed Air Lease, tapping contacts made during 40 years in the business.
Udvar-Hazy’s stature in the business helped him woo clients and top executives from ILFC. Some of those executives, who left over a period of more than a year, are accused in the lawsuit of taking the contents of their ILFC computers and bringing the information to Air Lease.
“After Udvar-Hazy resigned and started ALC, several of these ILFC executives, who ultimately joined ALC, worked in conjunction with Udvar-Hazy to divert lucrative deals with ILFC’s customers to ALC,” the lawsuit says. “They did so while sitting at their ILFC desks, earning ILFC paychecks, and owing undivided loyalties to ILFC.”
ILFC, with plush headquarters at MGM Tower on Constellation Boulevard, has business relationships with nearly every major airline around the globe. It has the second-largest fleet in the leasing industry with about 930 aircraft. (The largest is owned by General Electric Commercial Aviation Services.)
Air Lease, at its modest offices on Avenue of the Stars, has 102 aircraft.
The vast majority of ILFC is still owned by the federal government, which AIG pointed out in a statement:
“We regret having to file this suit, but the defendants’ misconduct left us no choice but to go to court to protect our rights and the rights of our shareholders, including our largest shareholder, the American taxpayer.”